Commercial Aviation News Briefing: September 26th

Air India, in a move that defies its traditional profligacy, will be launching an austerity drive beginning October 1st.

Rohit Nandan, Air India’s chairman, related in a memo that Air India will be enacting the following initiatives.Payments on reimbursements of entitlements and vouchers will be cut by 10%, in addition to a 10% cut in petrol and fuel entitlements.

Daily allowances for domestic and international travel will be cut by 10% across the board.

Lunch and meal allowances for company executives and managers, as well as mandatory “off” for working weekends, and holidays for this same group have been abolished

All reiumbursement for foreign travel for the purposes of conferences, workshops, and meetings will be stopped. Only travel for technical, and/or operational requirements will be reimbursed

10% of the company’s overseas employees will be laid off and/or re-located to India.

From a cost-cutting perspective, targeting such entitlements makes sense. The majority of world carriers have abolished such lavish employee benefits (though most do provide some free travel), especially for front-line employees. And Air India certainly needs to cut its costs, having suffered through net losses of more than US $1 billion in each of the past two fiscal years.

But such moves could end up causing discontent if company executives (especially the CMD) are seen to be flaunting such rules. While the travel of a few executives has a small effect on the finances of an airline, their entitlements can cause far worse problems for employee morale. Moreover, it’s entirely possible that the austerity drive could be halted by political meddling; employee unions could easily mobilize a few “well meaning” politicians behind their cause (of keeping their entitlements).

The United Airlines branch of the Air Line Pilots Association (ALPA) filed suit in a New York district court for the halting of merger integration between United and Continental, saying that the speed of integration does not allow adequate time for employee groups to learn new safety procedures. The suit is currently scheduled for a hearing on September 28th, just 2 days before the scheduled date for integration of new training and procedures, September 30th.

Wendy Morse, the head of the pilot union at United and a 777 captain, said pilots watched a computer-based slide show that lasts 54 minutes, and that some pilots have been designated to answer questions from fellow aviators. But pilots have gotten no classroom instruction or other training in the new procedures, she said, further relating that procedural changes include allowing the autopilot to fly the plane out of a severe wind gust rather than flying the plane manually as United pilots currently do, she said. (source Associated Press).

Given the complex nature of these safety issues, and the relatively short time allotted for pilots to complete such training (and perhaps the inadequacy of such training- which Ms. Morse said affected numerous issues beyond the wind-gust changes), the United pilots may have a valid reason for wanting more time. Yet United’s pilots, who have been angered in recent years by benefit cuts and increased CPA flying, may just as easily be using the merger timeline as a negotiating tool as they bargain to “regain” some of their lost benefits and flying.